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UNIT – I
Benefits
Customer value = –––––––––––
Cost
The corporate strategy must be aimed at delivering greater customer value
than competitors.
3. Marketing is Business :–
When customer is the focus of all activities marketer has not to search
customer to seek response to his products. Customer group is decided for
whom the product is prepared and presented. All the environmental factors are
studied by marketing department ,keeping in mind the decided consumer
group.
4. Marketing is surrounded by customer needs :–
Marketing starts with the customer needs and requirements. These are
turned into probable features that might satisfy the basic needs .The portable
form of the product is made out and presented before the customer for approval
. The customer suggest changes or improvements in the portable product and
the final product is brought to the customer.The following figure illustrates the
point:
Customer Suggest
Final Product Changes
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Marketing has its own sub system which interact with each other to form
complete marketing system that is responsive to company marketing strategy
.Through the subsystems shown in the following figure , the company monitor
and adapts to the total marketing environment.
7. Marketing as a Discipline :–
The subject of marketing has emerged out of business which has derived
its existence from economics. After emerging from business, marketing has got
its strength from related areas law, psychology, anthropology, sociology,
statistics, mathematics because the related problems impinge heavily on
consumer behaviour, legal aspects of marketing , research on consumer needs,
advertising media, pricing, promotion methods etc.
8. Marketing creates mutually beneficial relationship :–
The customer is the focus of all marketing activities. But during the last
decade, the focus has shifted to the way of doing business, i.e. The strategic
aspect of marketing. Here the means of marketer are their knowledge and
experience, and the end result is in the form of mutually beneficial relationship
with the customer
Q. Explain the scope of marketing .
Ans. The scope of marketing can be understood in terms of functions that a
marketing manager performs. In most of the business enterprises, marketing
department is set up under supervision of the marketing manager. The
functions of marketing may be classified into four categories as shown in the
following figure
Functions of
Marketig
Function of Functions
Function of Function of
Physical Facilitating
Research Exchange
Treatment Exchange
A. FUNCTIONS OF RESEARCH :–
A1. Marketing Research :–
It means the intelligence service of organization Marketing research helps
in analyzing the buyer’s habit , relative popularity of a product, effectiveness of
advertising media , etc. Its major task is to provide the marketing manager with
timely and accurate information so that better decision can be made.
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stored in warehouses till they are actually sold in the market. Thus
warehousing creates time utility. In addition, modern warehouses perform
certain marketing services also such grading, packaging, labeling, etc.
C4. Transportation :–
Modern organizations produce on a large scale to cater to the
requirements of customers scattered throughout the country. This calls for
transportation of goods from the place of production to the place of
consumption .Transportation provides the physical means which facilitate the
movement of persons,goods,and services from one place to another
Transportation is an important service which is provided by marketing
department. Rapid industrialisation and exchange of goods and services
cannot take place unless sufficient facilities for transportation are available.
D.FUNCTIONS FACILITATING EXCHANGE :–
D1. Salesmanship :–
Personal selling is an important method of selling goods. It is widely used
in retail marketing. The art of salesmanship has undergone a big change. The
attitude of salesman towards the customer and of customer towards the
salesman has also changed .Selling has become a science of human relations
and an art of getting along with people so effectively that sales resistance may
be reduced to minimum.
D2. Advertising :–
Advertising has become an important function of marketing in the
competitive world. It helps to spread the message about the product and thus
promote its sale. The importance of advertising has increased in the modern
era of large scale production and tough competition in the market. Business
firm use several media of advertisement to sell their products. These include
newspapers, megazines, radio, television, etc.
D3. Pricing :–
Determination of price of a product is an important function of marketing
manager. Price of product is influenced by the cost of product and services
offered , profit margin desired , prices fixed by the rival firms and government
policy. A sound pricing policy is an important factor for selling the products to
the customer . The price policy of a firm should be such that it attracts all types
of customers of different means.
D4. Financing :–
Financing and marketing functions of a business are interlinked with
each other. The marketing department has an important say on policies of the
finance department in regard to cash and credit sales .Financing of customer
purchasing has become an integral part of modern marketing.
D5. Insurance :–
A large number of risks are involved in exchange of goods and services.
Insurance helps to cover these risks it facilitates the smooth exchange of goods
by covering risks in storage and transportation
Q. “Marketing is an indispensable activity for any organization”. Do
you agree with the statement ? Elaborate your viewpoint with the
helpful examples.
Ans. “Marketing is an indispensable activity for any organization”. I am agree
with the statement : for today’s businesses, change is the only constant. What
was in vogue yesterday is out of fashion today, what is in vogue today will not be
in fashion tomorrow. This applies equally well to businesses.
Existence of Marketing :– Marketing is as old as mankind. A young child
trying to persuade his mother to buy him candy, a politician trying to
commence people to east their vote in his favor or a person trying to persuade
on employer to hire him are all practicing marketing. In a more formal setup,
business and non-business organizations are also involved in marketing.
Many management thinkers consider marketing to be the most critical
function of a business. In a business organization, the marketing division
generates the revenues essential for the survival and growth of the firm, the
finance department manages these revenues, and production and
manufacturing department use them to create products and services.
In this period of globalization, factors like economic crisis, differences in
standards of living, imbalances in income distribution, environmental
degradation, political unrest and other social, economic and technological
problem, tend to increase the challenges and threats faced by companies and
nations. While those factors can be threats to a business, marketers try
continuously to covert them into opportunities. This marketing plays a
significant role in successfully running a business.
Marketing :– The American Marketing Association (AMA) defines
marketing as “The process of planning and executing the conception,
promotion and distribution of ideas, goods and services to create exchanges
that satisfy individual and organizational goals.”
A marketing transaction is one in which the buyer and the seller,
irrespective of the nature of the product, experience mutual satisfaction the
seller on selling the product and making a profit and the buyer on purchase
and subsequent consumption of the product.
Economic Utility of Marketing :– Marketing lays emphasis on providing
the product to customers at the right place, at the right price, at the right time
and in the right place, at the right price, at the right time and in the right form.
Communication of information about the products helps customers determine
whether the product satisfies their needs. Marketers must focus on customer
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Need is a state of felt deprivation. It includes basic physical needs for food,
clothing, warmth, and safety; social needs for belonging and affection; and
individual needs for knowledge and self-expression. Need is a basic part of the
human makeup. Want is the form taken by a human need as shaped by culture
and individual personality. Demands are human wants that are backed by
buying power. People have almost unlimited wants but limited resources.
Thus, they want to choose products that provide the most value and
satisfaction for their money.
We understand a product as anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a want or a need.
It includes physical objects, services, persons, places, organizations, and
ideas. Likewise, the service is any activity or benefit that one party can offer to
another that is essentially intangible and does not result in the ownership of
anything.
When we learn the above mentioned concepts we can define the customer
value as the difference between the values the customer gains from owning and
using a product and the cost of obtaining the product. And consequently,
customer satisfaction is the extent to which a product’s perceived performance
matches buyer’s expectations. If the product’s performance falls short of
expectations, the buyer is dissatisfied. If the performance matches or exceeds
expectations, the buyer is satisfied or delighted.
When we are involved in the process of creating, maintaining, and
enhancing strong, value-laden relationships with customers and other
stakeholders, we say that we are in relationship marketing.
We comprehend a market as the set of all actual and potential buyers of a
product or service, and we manage the marketing through analysis, planning,
implementation, and control of programs designed to create, build, and
maintain beneficial exchanges with target buyers for the purpose of achieving
organizational objectives. On the contrary, when we reduce demand
temporarily or permanently with the aim not to destroy demand, but only to
reduce or shift it, we use the marketing techniques.
What weight should be given to the interests of the organization,
customers, and society? Very often these interests conflict. There are five
alternative concepts under which organizations conduct their marketing
activities.
1. Production Concept :–
Meaning :– Production concept is the philosophy that consumers will
favor products that are available and highly affordable and that
management should therefore focus on improving production and
distribution efficiency.
Focus :– The focus of the firms following the production concept is on
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Internal marketing must take place at two level. First level, the various
marketing functions – sales force, advertising, customer service, product
management, marketing research – must work together. At another level,
marketing must be embraced by the other departments, they must also think
customer. “Marketing is not a department so much a company orientation”.
Social Responsibility Marketing :– Holistic marketing incorporates social
responsibility marketing and understanding broads concerns and the ethical,
environmental, legal and social contact of marketing activities and program.
The care and effect of marketing clearly extend beyond the company and the
customer to society as a whole. Social responsibility also requires that
marketers carefully considers the role that they are playing and could play in
term of social.
Q. “Focal point of Marketing is building and delivering customer value
and satisfaction”. Do you agree with the statement ? Elaborate your
view point.
Ans. Concept of Value :– Different customers look for different benefits from
the same product. Therefore the value of a product differs from one customer
to other. Value to a customer refers to the difference between the benefits he
derives from the product or service and the cost of acquiring the product. The
customer is happy when the benefits and the cost match. The wider the gap
between the derived benefits and the cost of acquisition, the happier the
customer is. Tools like buyer analysis, market research and market planning
are helpful in indenturing and measuring the value customers expert. A high
customer value plays a vital role in generating customer loyalty because
customers compare the value cost gaps of the competing offers and select the
products that delivers the maximum value to them.
Value Chain :– Every firm performs a set of activities that helps in designing,
producing, marketing, delivering and supporting its products. These activities
form a process. At every stage of the process, the firm adds value. The Chain of
activities from raw material procurement to the after sales services is called the
value chain. It identifies nine strategic activities i.e. five primary and four
support activities to create value.
The Genouc Value Chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEPARTMENT
PROCUREMENT
INBOUND OPERATIONS OUTBOUND MARKETING SERVICE
LOGISTICS LOGISTICS & SALES
Primary Activities
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Primary Activities :– Primary activities are those activities that are involved in
the physical creation of the product, marketing and after sales support. The
primary activities involve buying and bringing the material into firm (inbound
logistics), manufacturing the product (operation), shipping the goods which
includes warehousing, order processing, scheduling, distribution etc.
(outbound logistics), advertisement, sales force management, promotion and
pricing (marketing and sales) and providing services like installation, training,
repair etc. (service).
Support Activities :– Support activities assist primary activities by providing
infrastructure that allows them to take place ongoing basis. Support activities
such as procurement, hiring the personnel, R&D, infrastructure (i.e. general
management planning, government activities and quality management),
accounting and legal activities etc. are handled by various departments. The
value chain includes a profit margin creating value that exceeds costs so as to
generate a return for the effort.
Providing Value Cost Balance :– Customers expect certain benefits from the
product. Marketers need to add as many benefits to their products as possible.
When the number of features in a marketing offer are more the customer feels
that the marketer has offered him more the customer feels that the marketer
has offered him more value. He also feels that his value expectations are met by
purchasing the product. Standard chartered bank offers a global credit card to
all its customers, while most of its competitions offers country specific cards.
However, marketers need to ensure that when adding benefits to a
product, the cost of the product does not increase exorbitantly.
Consumer satisfaction.
Today’s customers face a growing range of choices in the products and
services they can buy. They are making their choice on the basis of their
perceptions of quality, service, and value. Companies need to understand the
determinants of customer value and satisfaction. Customer delivered value is
the difference between total customer value and total customer cost.
Customers will normally choose the offer that maximizes the delivered value.
What Is Customer Satisfaction?
Customer satisfaction measures how well a company’s products or
services meet or exceed customer expectations. These expectations often
reflect many aspects of the company’s business activities including the actual
product, service, company, and how the company operates in the global
environment. Customer satisfaction measures are an overall psychological
evaluation that is based on the customer’s lifetime of product and service
experience. “
Why is Customer Satisfaction So Important?
Customer
Customer
Needs Perceived Expectations
Fulfilled Quality
Quality
Quality
Reliability
Reliability
Value
Value
Function
Function
Customer Performance
Performance
Satisfaction
Post Purchase
Behaviors
Customer Repurchase
Complaints
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Need for Retention :– There are some interesting facts on the basis of past
researches about acquiring a customer and retaining him.
1. Acquiring a new customer costs five times more than satisfying an existing
customer.
2. On an average, companies lose 10% of customers every year.
3. The customer profit rate increases over the lifetime of retained customer.
4. A 5% reduction in customer attrition may increase the profit rate by 25 to
85%.
A firm accrues several benefits by retaining its customers like
i) Increased Revenue :– If a customer stays with a company for longer time,
the chances of his spending more significantly increase because his
income might increase in that period. This will result in an increase in
revenue and is particularly true in cases where the customer’s family size
increases, leading to an automatic increase in the demand for various
products.
ii) Decrease in Cost of Selling :– A loyal set of customers keeps the selling
cost down and is likely to be more profitable in the future. A retained
customer is also less sensitive to price changes and is not easily driven
away by ads or competitor’s products.
iii) Advertising :– Customers usually influence other members of their
influence group who rely on them for references and opinions. Old
customers talk favorably about the company and its products. So, a
retained customer acts as a billboard for the firm by virtue of word of
mouth advertising for the firm.
iv) Cross Selling Possibilities :– A regular customer can be a potential
customer for the firm’s other products in the near future. For example, a
customer with a saving account with ICICI Bank can be a potential
customer for loan products, credit cards etc.
v) Structural Ties :– In order to attract new customers and retain old ones,
companies indulge in supplying special equipment or computer linkages
that helps the customers manage their tasks such as inventory, payroll,
order entry process etc.
Q. Explain Marketing Environment with its concept.
Ans. The Marketing Environment
Marketing Environment :– The actors and forces outside marketing that
affect marketing management’s ability to develop and maintain successful
transactions and relationships with its target customers.
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Marketing
Environment
Company's Company's
Micro Environment Micro Environment
P olitical Factors
E eonomic Factors
S ociocultural Factors
T echnological Factors
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Product
Research
Sales
Research
UNIT – II
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supplied to others and also involve many activities like bankery, finance,
insurance, distribution and services etc.
Some of the differentiating points between two markets are as follows :-
a) Fewer Buyers :– In business market, buyers are fewer is number as
compared to consumer market.
eg. A book publisher looks towards universities for the
recommendations of its books. But after recommendations sells the
same to the students who are thousands in number.
b) Close Supplier :– Customer relationship :– There is a smaller
customer base but having important power, we can observe that
there is a close relationship between the two parties because
customer is heavily dependent upon supplier.
c) Geographically Concentrated Buyers :– Most of the business
concerns that products the same nature of products are generally
found concentrated in a particular geographic area. Availability of
raw material and transportation reduces its cost but in consumes
market there is different way.
d) Derived Demands :– The demand for many business goods is
ultimately derived from demand of consumer goods. Organisations
often target marketing as ultimate consumer even though firms don’t
sell them directly in consumer market.
e) Inelastic Demand :– The demand for many business goods and
services is inelastic, means fluctuations in prices of product will not
significantly affect the demand for product in business market.
Elastic demand means a change in price will cuase an opposite
change in demand in consumer market.
f) Fluctuating Demand :– The demand for business good and services
tends to be more volatile than the demand for consumer goods and
services.
g) Professional Purchasing :– Products in business markets are
purchased generally by highly spelled and professional people by
inuiting bids, tenders and quotation which is not found in case of
consumer market buying.
h) Direct Purchasing :– In business market buyers buy directly from
manufactur rather then through intermidiator, as in case of
consumer buying.
Q. What is Organizational Buying Behaviour? Explain the buying
decision process ? Who are part of this buying decision ? How can a
buyer decides in making a purchase ?
Ans. An organization not engage only in selling of products, they also engage in
buying of products also like material, manufactured parts, plants and
equipments and different services etc. So they need the services of other
organization also. So for their services there is need of understanding buying
procedures.
According to S.J. Skinner “Organisational buying behaviour refers to the
actions and decision process of procedures, reseller and government in
deciding what products to buy.
From this definition it is conclude that organizational buying is the
decision-making process in which one organization receives the resources from
other organization and the provides identify the needs for products and
services and the receivers identify, evaluate and choose among alternative
brands and suppliers.
While purchasing a decision of buying goods is made by just one person
instead of most organization who work in it but they can participate in the
purchase decision process. The people who are part of buying decision are
users, influencers, buyers, deciders, and gate helper.
a) Users :– These are those individuals who actually use the products in
the organization. They frequently initiate the purchase process.
b) Influences :– These are highly technical people such as engineers,
who help develop the specifications and evaluate alternative
products of the competitors.
c) Buyers :– These people are also called purchasing agent who helps in
selecting suppliers and negotiating the terms and condition of
purchase.
d) Decides :– These are the individuals who actually choose the
products and suppliers. For routine items, decides are same but if
there is critical case then top management tapes decision.
e) Gatekeepers :– These people consists of secretaries and technical
personnel who control the how of information to and among the
persons in the buying center.
A buyer has to take number of decision in making a purchase. For these
decision there are many situations/transaction made by buyers. These
situations divided in three categories new task, modified rebury and straight
rebug.
1. Network :– It is a kind of buying situation in which a purchaser buys a
product or services for the first time to perform a new job or to solve a new
problem. In this case the buyer has to face many challenged regarding
product specifications, vendor specifications and procedures for the
future purchase, therefore the longer the time to decision completion.
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Or
Q. What is market segmentation and what are the level of segmentation.
Ans. Market Segmentation :– Market segmentation is the process of dividing a
total market into group of consumers who have relatively similar product
needs.
According to Schiffman and Kanuk “it is the process of dividing a market
into distinct subset of consumers with common needs or characteristics and
selecting one or more segments to target with a distinct marketing mix.
Bases for Segmentation :– To develop a segmentation strategy the first step is
to select the most appropriate bases on which to segment the market. Five
major categories of consumer popular bases for market segmentation.
1. Geographical Segmentation :– In geographic segmentation, the market
is divided by location such as nations states, regions, cities or
neighbourhoods. Marketers can decide to separate in one or a few
geographic areas or in allareas but pay attention to local varieties in
geographic needs separately. Some companies even subdivided major
cities into smaller geographic areas.
2. Demographic Segmentation :– Demographic characteristics such as
age, sex, marital status, income, occupation and education are most often
used as the basis for market segmentation. Demographic variables are
most popular bases for segmenting consumer groups because consumer’s
wants, meets, prefrences and usage rate are highly associated with
demographic variables.
3. Psychographic/Psychological Segmentation :– Psychographic or
Psychological characteristics refers to inner characteristics of individual
consumer. In psychographic segmentation consumer are regenerated
into different groups on the basis of life styles, personality and attitude.
People with some demographic groups on exhibit very different
psychographic profits. Marketers conduct psychographic research to
capture insight and creat profiles of consumers they wish to target.
4. Socio-Cultural Segmentation :– Consumer markets are subdivided in to
segments on the basis of social-cultural variables like social class, sub
cultural membership, core cultural values, family life cycle etc.
5. Use Related Segmentation :– An extremely popular and effective form of
segmentation categories consumers in terms of product, services or brand
usage characteristics such as usage rate, awareness status and degree of
brand loyalty.
Levels of Market Segmentation
The number of possible segments that will result from a segmentation
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analysis can be as few as one or as many as the total number of consumers that
are in the total market. Market segmentation represent an effort to increase a
company’s targeting precision. It can be carried out at four levels as (1)
Segment (2) Niches (3) Local (4) Individual Customer but firstly we will discuss
about Mass Marketing :-
1. Mass Marketing :– In mass marketing consumers are indistinguishable
and all are in one segment seller engages in mass production, mass
distribution, and mass promotion of one product for all buyers. Mass
Marketing would be a logical strategy if all consumers were alike regarding
their needs, wants and demands with same background, education and
experience.
2. Segment Marketing :– A segment market consists of a large identifiable
group within whole market. Companies practice segment marketing
recognize that buyers differ in their wants, needs, purchasing power,
geographical locations, buying attitude and habits. Segment marketing is
a sort of midpoint between mass marketing and individual marketing.
3. Niche Marketing :– Niche Marketing is sometimes also called micro-
marketing. Marketers usually identify niche by dividing a segment into
subsegments. The customers in the niche have a different set of needs and
they are also ready to pay a premium to the firm that best satisfies their
needs.
4. Local Marketing :– When marketing programmes are designed to cater
the needs and wants of local customer groups (trading areas,
neighbourhoods, individual stores).
eg. Vegetable shapneas to our locality and like P&B Bank gives every
services in different branches.
5. Individual Customer Marketing :– When a marketers detects as many
segments as there are consumers so that each segment is composed of
only one consumer, it has been identified an individual. Marketing as a
customized marketing. This results when the marketer believes that no
two consumers will respond the same way to its marketing efforts.
Q. What are approaches for selecting target Markets ?
Ans. Market Targeting :– Once the form has identified its market segment
opportunities, it has to evaluate various segments and finally decide how many
and which ones to target. This is called market targeting which a marketer
does with appropriate marketing mix. To be an effective target a market
segment must be :-
1. Identification :– Marketers must be able to identify the relevant
characteristics about product or services to divide the market in to
separate segments on basis of common need some segmentation variables
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to other segments. Production and marketing cost may be higher with the
multi segment approach because it often requires a great number of
production processes, material and skills as well as several different
promotion, pricing and distribution methods.
Q. What is product positioning ? What are the strategies to position
products ?
Ans. Product Positioning :– Product Positioning is the act of designing
company’s offering image so that they occupy of meaningful and distinct
competitive position in minds of target customers. Once market has been
segmented, and attractive segments have been targeted, the next task is to
work with in a targeted segment to position the product in mind of customers
and develop a marketing mix that will satisfy the consumer.
Product positioning is achieved through a variety of marketing strategies
and programs in product design, pricing, distribution of promotion.
Strategies for Product Positioning
Marketers rely on many strategies to position the products or services the
following are some of these strategies the combination of these strategies are
also possible.
1. Position on Product Features :– Product may be positioned on basis of
its features on advertisement may attempt to position the product by
reference to its specific features. Yet this may be a successful way to
indicate product’s superiority consumers are usually more interested in
what such features means to them.
2. Position on Benefits :– This approach and strategy is closely related to
previous one. Here product is positioned on its benefits like colgate
(strong teeth and safety) Pepsodent (Gum Protection), Close-up (Fresh
Breath).
3. Position on Usage :– This strategy is related to benefit positioning many
products are sold on basis of their consumer usage situation. A company
sometime sought to broaden brand association with a particular usage
and situation.
4. Position on User :– This strategy associate a product with its user or a
class of user. Sometimes cosmetics companies seek successful highly
visible model as their spokesperson as association to their brand.
5. Position against Competition :– So many times, success for a company’s
strategies involves looking for weak points in the positions of its
competitions and then launching marketing attacks against those weak
points. In this approach the marketer may either directly or indirectly
comparison with competing products.
Product
Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product
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5. Fifth level stand potential product, which encompasses all the possible
augmentations and transformations the product might undergo in future.
Product Classification or Tools of Product Differentiation
As products have many tangible and intangible attributes so products
should be consider in identifiable groups, formally using a classification
pattern which aids marketing planning.
Product
Consumer goods are further divided into four groups which are explain as
under :-
a) Convenience Goods :– These are usually inexpensive items whose
purchase requires very little efforts on the part of the consumer. The
weekly shopping list is, for the most part, composed of convenience goods.
These are further divided into two goods.
i) Staple convenience goods. There are goods consumed by most people
everyday (eg. Milk, bread, potatoes etc.)
ii) Impluse convenience goods. These are goods which are not
preplanned and purchase on the spot.
b) Shopping Goods :- Shopping goods includes durable and semi durable
items. These are generally expensive Homogeneous and Heterogeneous
items.
i) Homogeneous Goods :– White goods such as T.V., Refrigerator,
Washing Machines.
ii) Heterogeneous Goods :– Stylish and non standard prices in
secondary behaviour for these type of goods and habbit play
important role in buying.
c) Speciality Goods :– Consumers of speciality goods pay for prestige as well
as product itself. eg. Jewelly, branded clothes, designer, watches etc.
d) Unsought Goods :– The customer not considered these goods before made
aware of them. Or we can say the goods which are unaware.
2. Industrial Goods :– Industrial goods are further divided into five
categories as we have seen in diagram. These goods are not directly used
by consumers. Those are need to make finished goods for consumers.
a) Installations :– For producing any product there is used of
machinery and plant. There are goods used tea installation of plant
and machinery to produce further products.
b) Accessories :– Accessories include ancillary plant and machinery,
office equipment and office furniture.
c) Raw Material :– Raw material are bases of finished goods such as
thread are low material and cloth are finished goods.
d) Component Parts and Material :– Component part and materials
include replacement and maintenance items for manufacturing
machinery.
e) Supplies :– These includes office stationery, cleaning material and
goods require for general maintenance and repairs.
Q. Explain the product life cycle ?
Ans. Product Life Cycle (PLC) :– PLC is based on the premise that a new
product enters a ‘life cycle’ once it is launched in the market. The product has a
‘birth and a death’ – its introduction and decline. The intervening period is
characterized by growth and maturity. There are four stages in this life cycle
that is introduction, growth, maturity, decline etc.
PLC is influenced by following factors :–
1. The essential and intrinsic nature of the product itself.
2. Change in marketing environment.
3. Changes in consumer prefrences
4. Competitive actions.
If according to PLC we want to plan our marketing strategiesther in
strategic terms, the task of marketing management is :-
1. Anticipate the latest consumer needs and prefrences.
2. Forest and estimate the stage wise shape of total cuque of product life
cycle.
3. Carefully and wisely design on active and appropriate strategy of
marketing for each stage from introduction.
4. Identify the product’s pace of movement from one stage of PLC to
another.
Stages of Product Life Cycle and their Strategies :–
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1. Introductory Stage
2. Growth Stage
3. Maturity Stage
4. Decline
Products have limited life. Product sales passes through distinct stages
each passing different challenges opportunities and problems to seller. Profit
rise and falls at different stages. Product require different marketing financial,
manufacturing, purchasing and human resources strategies in each stage of
their life cycle.
The different stages of PLC are as follows :–
1. Introductory Stage :– A period of new product launch and its duration
depends on product’s rate penetration through concerned market
segment. This period turns to growth period when market is well aware of
product to attract wider user groups. It is a period of slow sale growth as
the product is introduced in market. Profits are non existent in this stage
due to heavy expenses of product introduction limited distribution as in
this stage. It is often exclusive distribution in selective segment. Role of
pricing at this stage of life cycle is to establish the product in such a way to
permit further strategy to be implemented.
2. Growth Stage :– A period of rapid market acceptance of product and
substantial profit improvement also. During this stage product is still
vlnerable to failure (although most failures occur early in the product life).
Competitive product, launched by more powerful form, can enter the
market in this stage. Some characteristics :-
1. More competitors and less product distinctiveness
2. More profitable returns
3. Rising sales
4. Company or product aquistion by larger competitors.
3. Maturity Stage :– A period of a slowdown in sales growth as productions
achieved acceptance by most potential buyers. Profits stabilize or decline
because of marketing outlays to some characteristics :-
1. Sales continuing to grow, but at a very much decreased rate.
2. Prices beginning to fall in battles to retain market share. Profit begin
to fall correspondingly.
4. Decline Stage :– A stage when sales shows a downfall producers decides
to abandon the market but not only enough. Sometimes extension of life is
possible as number of competitors are falling some characteristics :-
1. Sales falling continall for the total period.
2. Intensification of price cutting.
3. Producers deciding to abandon the market.
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5. Business Analysis and Mark Share Analysis :– This stage is very much
important in total process of new product development because several
vital decisions regarding the projects are taken based on the analysis done
at this stage.
This stage will decide whether from financial and marketing point of
view the project is worth proceeding with investment and profitability
analysis of the project under different assumptions are made at this stage.
The projects overall impacts on the corporation’s financial position with
and without the new products are estimated and compared. The financial
estimate would be reliable only if they are based on a fairly accurate
demand forecast and related market factors. The marketing exports by
now should have undertaken detailed exercise on the marketing of the
product.
6. Test Marketing :– During this stage the product is actually tried out in
selected Market Segments only based on the results of test Marketing will
be a marketer and manufacturer usually launch large scale
manufacturers of the New products. Test marketing is a form of business
errors. It is a controlled marketing experiment with minimum possible
cost and risk to decide on the soundness and feasibility of full-fledged
marketing of the product. If totally new products are introduced into a
market on commercial scale without resorting the test marketing. It may
so come to light that the product was not the right one for the chosen
market. This may be too costly a mistake for the firm Test Marketing. In
such a case may indicate that too sales prospects for the product is bound
to be poor and the firm may opt. to drop the new product idea and save the
investment contrary to that if results are received +ve the firm may go
ahead with commercial production and marketing of the new products.
7. Commercialization or Crash Introduction :– A crash introduction is full
scale commercialization of a new product as quickly as possible. The
resources needed to move into target markets are immediately committed.
In this way competitors are given little time to prepare their responses to
the product. A crash programme is most often selected when competitors
can counter quickly and maximum lead time is needed to establish
market position. A crash introduction tends to maximize other risks
because substantial resources are committed quickly.
Q. Discuss in detail the various Decisions Regarding product mix and
product line ?
Ans. Product Mix :– The 1 task of Marketing Manager is to answer the
st
the functional aspects of the product but also its features, design, colour, style,
price, distribution channels after sales services etc.
A related product strategy decision involves the consideration of the depth
and breath of the product line eg. The Marketing Manager of a fan
manufacturing company has to decide whether he should sell all kinds of fans
including table, ceiling and pedestal fans of all standard size and in various
price ranges to suit the pocket of customers of all income groups. He may
choose to market a limited product line or a full product line.
A company may diversity by broadning its product line in related products
or unrelated products or both in related as well as unrelated products. When
the Co. Diversity into unrelated products this is called as “Scramble
Diversification”. On the other hand, Bata Shoe Company has diversified in
related products by marketing socks, boot polish etc. This is called “related
product diversification”.
In certain situations, a company may adopt the strategy of slimming or
contracting the product mix it may do so by abandoning a product line or
reducing the variety of models in a product line called product line
simplification. Many companies like Xerox, Radio-corporation of America,
General Electric, etc. dropped certain products lines altogether and also
thinned certain fat product lines. The objective of trimming the product line is
to abandon the low sales volume and low profit products and concentrate on a
limited number of high-profit products.
“Thus a product mix (also called product assortment) is the set of all
products and items that a particular sellers offers for sale.”
It is the set of all product lines and items that a particular company offers
to buyers. The width of a product mix refers to now many different product
lines a company carries. For example – Proctor and Gamble’s (P&G) product
mix in India consists of four lines such as Detergents, Bar Soaps, Personal
Hygienes Products and disposable Diapers.
Product Line :– It is a group of products that is closely related because they
perform a similar function, targeted at same customer groups and marked
through the same channels. The important attributes associated with product
line are discussed below :-
1. Line Stretching
2. Line Filling
3. Line Modernization
4. Line Teaturing
1. Line Stretching :– Decision related to line stretching are taken whenever
the marketer feels he can increase his profits by either adding or dropping
items from the line. It can be upward, downwards or both ways.
Downward stretch taken place when the company final that its offering are
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at high price and of the market and than stretch their line downward for
example P&G. Ariel detergent began at premium end and then the down
market ariel bar was introduced to tap lower segment.
Conbary to that upward stretch occurs. Occurs when a company
enters the upper end through a line extension. The regimes for this may
be a higher growth rate, better margins or simply a wish to be a full line
marketer, an example of a successful upward stretch would be that of
lifebuoy, which started from hygienic bath soap for the masses to a
premium quality liquid hand wash for higher starter of society. Through
out this stretch the brand had used hygiene as is core benefit, so that there
was no dissonance in the minds of the consumers.
2. Line Filling :– A product line can also be lengthed by adding more items
within present product range there are several reasons for line filling -
Ø
Reaching for incremented profit.
Ø
Trying to satisfy dealers who complain about lost sales because of
missing items on line.
Ø
Trying to utilize excess capacity.
Ø
Trying to offer a full line of product.
Ø
Trying to pluge holes in the positioning map.
For example :– To launch of cinthol indifferent variants is an example of line
filling. Today cinthol is a line-soap with yellow packaging and a cologne
variatum with blue wrapping apart from the initial cinthol fresh. There is also
cinthol international. Packed in a red pack with a picture of mountains
depicting freshness.
The company needs to differentiate each item in the consumers mind. For
their each item must possess a difference which sets it apart from others.
3. Line Modernization :– Even when the product line length is adequate the
line might need to be modernized. The issue is whether to overhand to line
completely or one at time. The piecemeal approach allows the company to
see how customers and dealers react to the new style.
Piecemeal modernization is less of a drain on the companies cash
flow. A major disadvantage of Piecemeal Modernization is that it allow
competitors to see changes and starts redesigning their own line.
In rapidly changing Market Product Modernization is carried out
continuously because competitors are continuously upgrading their
options. Each company must redesign their own offering. A company
would like to ungrade customers to higher valued higher priced items. A
major issue is the timing of the product line improvement so that they do
not happen to early and damage the sales of their current product line or
came out too late so that the competitors can establish a strong foothold.
potential marketing tool well designed packages can create convenience and
promotional value.
Benefits of Packaging :–
1. It protects a product in a way to the consumer.
2. It provides protection to the product after it is purchased.
3. Package size and shape must be suitable for displaying and stocking
the product in the store.
4. It helps to identify a product and this may prevent substitution of
competitive products.
Packaging is also one of the way through which Marketer can differentiate
his product from the competitors brand. Despite of having various benefits
there are certain limitations of packaging also –
Limitations :–
1. Packaging decreases the natural resources.
2. Packaging is too expensive.
3. Some forms of plastic packaging are health hazards.
4. Packaging is deceptive.
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about the product. It provides the legal protection for unique product feature.
Marketer should develop a deep set of positive associations for a brand.
Marketer must know at which level the brand identity. It will be a big mistake
to promote only attributes 1stly because the buyers are not as mature and
intiator in the attributes of the product as the benefits and competitors can
easily copy the attributes. 3 current attributes may became less desirable
rd
tomorrow.
2. Brand Equity :– Brand equity encompasses a set of assets linked to the
brand’s name and the symbols that adds to the value provided by a
product or service to the consumers. There is always underlying
expectation that the brand will deliver to satisfaction. It has promised. A
consumer expects a certain standard of quality and satisfaction which to
manufacture has to make sure and that the product line up to that
expectations, otherwise the consumer will stop buying that product.
Simply speaking that brand identities primarily exists in the mind of its
customers. A brand is his or her evaluation of performance of that brand
and if his evaluation is positive and the customer is willing to pay more for
a particular brand one another similar products. This is the strength of
brand equity. The brand equity refers to the value inherent in a well
known brand name. From the consumer prespective brand equity is the
added value bewtowed on the product.
Brand equity makes the companies to charge a price premium eg.
Reachers have estimated that because of colgate brand equity. The colgate
pamolive company is able to price colgate toothpaste about 37% higher than
competitive store brands with objectively identical attributes.
A relatively new strategy in the marketers co-branding. The basis of co-
branding is in which two brand name are featured on a single product eg. Hero-
honda, Maruti-Suzuki to use another brand equity to enhance the primary
brand equity. Customers are ready to pay a premium because of a perceived
reliability. Trust worthiness, as well as the positive image of superior quality
that the brand commands. The major assets of brand equity are –
i) Brand Awareness :– This refers to the strength of a brands presence
in the mind of the consumer. Awareness is measured according to
the Recognition and recall of brand.
ii) Perceived Quality :– Perceived quality means level of expected
quality that product holds in the mind of consumers are buying and
in that sense. It is the ultimate measure of the impact on the mind of
consumer.
iii) Brand Loyality :– A brand value to the company is the measure of
customer’s loyality towards a brand since a company consider
loyality as a major assets which encourages and justify loyality
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It firm plans to make the new product profitable over to long period. It may
face the situation that net lubants might later use him production
techniques which will give them a cost advantage over the innovating firm.
7. Product Line Pricing :– Strategic Marketing has led firms to adopts
segmentation and diversification strategies which have results in the
multiplication of the number of products sold by the same firm or under
the same brand. Generally a firm has several product lines and with in
each product line there are usually some products that are functional
substitutes for each other and some that are functionally complementory.
This strategy of product development bring about an inter dependency
between products, which is reflected either by a substitution effect or by a
complementary effect since the objective of the firm is to optimize to overall
outcome of its activities. It is clearly necessary to take this
interdependence into account when determining the prices.
8. Price Bundling :– When the products are related but are non-substitutes
i.e. complementary or independent one strategic option for the firm is
optional price bundling where the products can be brought separately.
But also as a package offered at a much lowered price than the sum of the
parts. Because the products are most substitutes it is possible to get
consumers to buy the package instead of only one product of the lie. This
pricing strategy is common practice. For instance, in the Automobile and
Audiovisual Markets where packages of options are offered with the
purchase of a car or of stereo equipment.
9. Premium Pricing :– This price strategy applied to different version of to
same product. A superior version and a basic or standard model. The
potential buyers for standard model are not, if economic of scale exists it is
unprofitable for the firm to limit its activities to one of the two market
segments the best solution is to exploit jointely economic of scale and
heterogeneity of demand by covering the two segments the lower end of the
market with a low price and the high end with a premium price. eg.
Airlines have used this strategy. Their market consists of both a price
insensitive business traveler and a very price sensitive holiday traveler.
10. Image Pricing :– A variant of premium pricing is image pricing the
objective is the same to signal quality to uninformal buyers and use the
profit made on the higher priced vision to subsidize the price on the lower
priced version. The difference is that there is no real difference between
products and brand. It is only an image or perceptual positioning. This is
common practice in markets like customer snacies etc. whose emotional
or social values or a brand is important for the consumers.
Q. What is the importance of distribution channel ?
Ans. In order to understand the marketing channel, it is important to know the
reasons for emergence of distribution channels. The primary justification of
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UNIT – IV
3) Trade Advertisement
Ø
Advertisement addressed to wholesalers, distributors, agents,
importers/ exporters
Ø
Goods advertised for resale.
4) Retail Advertisement
Ø
Local weekly newspapers, regional magazines, TV, Radio etc.
5) Financial Advertisement
6) Recruitment Advertisement
7) Tenders
8) Educational Advertisement
9) Classified Advertisement
10) Notices
Media of Advertising :–
Advertising media are the means to communicate the message of the
advertiser to the customer. Manufacturer communicates information about
their products to their present and prospective consumer through advertising
media. The various types of advertising media are shown on below with the help
of a figure:
Media of
Advertising
Functions of Advertisement :–
1) Communication to target group.
2) Increase the sales.
3) Creation of brand image/ corporate image.
4) Cost effective method of communication.
5) Stimulate the customers to buy.
6) Creation of demand for the products/ services.
7) Enhance the market potential.
8) Educate the people.
9) Increase the profitability of the company.
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Ø
Premiums
Ø
Point-of-purchase (POP) displays
Ø
Contests,
Ø
Rebates
Ø
Quantity Deals
Samples
Coupans Premiums
Techniques
of Sales Point of
Quantity Promotion Purchase
Deals Display
Rebate Contest
MARKETING MANAGEMENT
d) Price packs :– They can take the form of a reduced price pack or
banded pack, which is two related products banded together.
e) Premiums :– Merchandise offered at a relatively low cost or free as an
incentive to purchase a particular product.
f) Prizes :– For eg. Cash, free trips etc.
g) Free trails :– Invite prospective purchasers to try the product
without cost.
h) Product warranties/guarantees :– Explicit or implicit promises by
sellers.
2. Sales Promotion Schemes :–
a) Price-off :– A straight discount off the list price on each case
purchased during a stated time period.
b) Allowance :– An amount offered in return for the retailers agreeing to
feature the manufacturer’s product in some way. For eg.
Advertisement allowance.
c) Free goods :– Offers of extra cases of merchandise to intermediaries
who buy a certain quantity.
3. Business Promotion Schemes :–
a) Trade Shows :– Industry associations organize annual trade shows.
b) Sales contest :– It is a contest involving the sales force or dealers
aimed at inducing them to increase their sales over a stated period,
with prizes going to those who succeed.
c) Speciality advertising :– It consists of useful, low cost items given
by salespeople to consumers without obligations and which bear the
company’s name and address and sometimes an advertising
message.
Sales Promotion Strategies :–
There are three types of sales promotion strategies: Push, Pull, or a
combination of the two.
A push strategy involves convincing trade intermediary channel members
to “push” the product through the distribution channels to the ultimate
consumer via promotions and personal selling efforts. The company promotes
the product through a reseller who in turn promotes it to yet another reseller or
the final consumer. Trade-promotion objectives are to persuade retailers or
wholesalers to carry a brand, give a brand shelf space, promote a brand in
advertising, and/or push a brand to final consumers. Typical tactics employed
in push strategy are: allowances, buy-back guarantees, free trials, contests,
specialty advertising items, discounts, displays, and premiums.
P Strategy Selected P
U Depends on: U
S Type of Product-Market & L
Product Life-Cycle Stage
H L
A pull strategy attempts to get consumers to “pull” the product from the
manufacturer through the marketing channel. The company focuses its
marketing communications efforts on consumers in the hope that it stimulates
interest and demand for the product at the end-user level. This strategy is often
employed if distributors are reluctant to carry a product because it gets as
many consumers as possible to go to retail outlets and request the product,
thus pulling it through the channel. Consumer-promotion objectives are to
entice consumers to try a new product, lure customers away from competitors’
products, get consumers to “load up” on a mature product, hold & reward loyal
customers, and build consumer relationships. Typical tactics employed in pull
strategy are: samples, coupons, cash refunds and rebates, premiums,
advertising specialties, loyalty programs/patronage rewards, contests,
sweepstakes, games, and point-of-purchase (POP) displays.
Car dealers often provide a good example of a combination strategy. If you
pay attention to car dealers’ advertising, you will often hear them speak of
cash-back offers and dealer incentives.
Q. Write short notes on :
A) Public relations. B) Personal selling
Ans. A) Public Relation :– Introduction :–
The main goal of a public relations department is to enhance a company’s
reputation. Staff that work in public relations, or as it is commonly known, PR,
are skilled publicists. They are able to present a company or individual to the
world in the best light. The role of a public relations department can be seen as
a reputation protector.
The business world of today is extremely competitive. Companies need to
have an edge that makes them stand out from the crowd, something that
makes them more appealing and interesting to both the public and the media.
The public are the buyers of the product and the media are responsible for
selling it.
Meaning :– Public relations (PR) are the management of internal and
external communication of an organization to create and maintain a positive
image. Public relations involve popularizing successes, announcing changes
and many other activities.
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disasters. Some marketing efforts are known to have backfired. Others have
yielded lukewarm results. Marketing requires constant fine tuning and
adjustments to reflect and respond to the kaleidoscopic environment of our
times.
But maximum benefits under the circumstances are guaranteed if the
client the country, for instance implements a rigorous Marketing
Implementation, Evaluation, and Control MIEV plan.
The first task is to set realistic quantitative and qualitative interim and
final targets for the marketing program and then to constantly measure its
actual performance and compare it to the hoped for outcomes. Even nation
branding and place marketing require detailed projections of expenditures vs.
income budget and prforma financial statements for monitoring purposes.
The five modules of MIEV are:
1. Annual plan control :– This document includes all the governments
managerial objectives and numerical goals. It is actually a breakdown of the
aforementioned proforma financial statements into monthly and quarterly
figures of “sales” in terms of foreign direct investment, income from tourism,
trade figures, etc. and profitability.
It comprises at least five performance gauging tools:
I. Sales analysis comparing sales targets to actual sales and
accounting for discrepancies.
II. Market share analysis comparing the countrys “sales” with those of
its competitors. The country should also compare its own sales to the
total sales in the global market and to sales within its “market
segment” neighboring countries, countries which share its political
ambience, same size countries, etc.
III. Expense to sales analysis demonstrates the range of costs both
explicit and hidden implicit of achieving the countrys sales goals.
IV. Financial analysis calculates various performance ratios such as
profits to sales profit margin, sales to assets asset turnover, profits to
assets return on assets, assets to worth financial leverage, and,
finally, profits to worth return on net worth of infrastructure.
V. Customer satisfaction is the ultimate indicator of tracking goal
achievement. The country should actively seek, facilitate, and
encourage feedback, both positive and negative by creating friendly
and ubiquitous complaint and suggestion systems. Frequent
satisfaction and customer loyalty surveys should form an integral
part of any marketing drive.
Regrettably, most acceptable systems of national accounts sorely lack the
ability to cope with place marketing and nation branding campaigns.
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or auction sites to reach new customers and serves to current customers and
encourages one customer to sell the product to the another customer.
To do the business on the internet organizations create an effective
website, place the ads and promote it online, create web communities, and
uses e-mail. The other sides of E-commerce are problems of profitability and
legal and ethical issues.
If you’re still struggling to finally reach your financial independence &
make a nice living from your home, then listen... The only reason why you’re
failing is because you don’t have a good website marketing strategy.
If you ask any successful offline world entrepreneur how it’s possible to
build a great business without a proper strategy, he’ll start laughing. But many
internet marketers are trying to make money without even realizing what on
earth they’re doing online…
If you believe that you can jump in, create a website, submit it to a few
directories or blogs, sit down, relax & watch those thousands of dollars (that
you’ve seen in many marketers’ checks) to come, then you need to stop right
there. It ain’t gonna happen. You need to think: who you are and where do you
want to be in the future. Whether offline or online, there are only two things that
matter: “Buying” and “Selling”. Basically, to simplify, it all comes down to
this:
Who is your customer?
What is he or she specifically looking for? You
must know their problems or desires. You must be
in their shoes and find out what is that would
make them feel better (an offer).
What is your offer?
Why should they buy from you? How come
you’re better than the rest? Why should they trust
you? Are you offering your own or someone else’s product? How will you create
an irresistible offer so they beg you to sell it to them?
Think about it… There are millions of people buying online every single
day. If they’re not buying from you then whose fault is that - theirs or yours?
Before you even start creating internet marketing strategy for your
website(s), you need to do a research. That’s where it all begins actually. Just
like in any business, you have to understand where you are and what can you
do.
Ø
1 Phase - Online Research :–
In this phase, you must research your market. Who are your main
competitors? What are they doing online? PPC, SEO, press releases, develop
their own products, do affiliate marketing or Adsense? What are their
weaknesses? Do they offer a guarantee? Is their product really good? Do they
build links constantly or not?
Who is your favourite customer? Where do they hangout: MySpace or
YouTube? Are they freebie seekers or desperate buyers? What forces them to
buy one or another product? Read reviews, forums, testimonials to find out as
much as you can about your target market.
Ø
2 Phase – Data Analysis :–
If you’ve performed a thorough online market research, it’s time to
systematize the data you have. Write down what are the main strengths and
weaknesses of your competitors. Maybe you have more time than your
competitors? Or maybe you know some targeted traffic source that others
don’t. How might this affect your business?
Which are the places your target market usually visits? What are their
main concerns? Maybe they’re not satisfied with the products in the market.
Can offer something better, maybe in a form of a bonus? After that, you come to
the next step, which is developing your internet marketing strategy.
Ø
3 Phase – Strategy Development :–
When you already know your target market and your competitors, you are
able to start creating your internet marketing strategy (or strategies). Just sit
down and think about: who you are and what you can offer to the target market.
It involves a little bit of planning. What marketing methods you’ll use and
which ones you can afford? PPC, SEO, email, blogging, podcasting, video
blogging, webinars, viral traffic generation, link building, banner exchange or
others…? You must prioritize your web marketing tactics. Find out what’s
going to bring you positive ROI in the shortest time possible.
Do you have enough time to perform search engine optimization? If so,
then sit and do everything you can, day in day out, to rank at the top in search
engines. Don’t have time? Then buy PPC traffic and start testing your landing
pages effectively. Or buy resell rights to products and sell them on ClickBank
with the help of JV partners.
Don’t have time AND money? Then you better get one or another,
otherwise you’re dead.
Seriously, you must find ways to get time or money. You need to think
about how you can exploit other people’s time and money to build your own web
business. That’s what rich people do and that’s what you must do if you want to
survive in this competitive world.
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Ø
4 Phase – Monitoring Performance :–
When you have an internet marketing plan, you can start
implementing it right away. The last step is to start
monitoring your internet marketing campaigns. Which
keywords people typed into search engines to find your site?
Which keywords brought you the most money in PPC
marketing? Are you satisfied with your SEO rankings or
not? Do majority of your visitors leave your site without even
spending 30 seconds? And so on…
Only with the help of close monitoring you can discover
what works and what doesn’t. Testing landing pages, testing
Adwords ads against each other (A/B split testing) can show you some amazing
results. And remember – you never know for sure until you TEST it!
There is no formula for an effective Internet marketing strategy. It depends
on your individual situation. When you realize your strengths and weaknesses,
you’ll be able to come up with a great marketing plan. No matter if you’re
thinking about Adsense site, affiliate site or your own product. When you find
out what you’re able to accomplish with your resources at the moment, you can
create a great web marketing strategy for your online business and finally
breakthrough on the internet.
Green Marketing :– Unfortunately, a majority of people believe that green
marketing refers solely to the promotion or advertising of products with
environmental characteristics. Terms like Phosphate free, Recyclable, Ozone
friendly, and environment friendly are some of the things consumers most
often associated with green marketing. While these terms are green marketing
claims, in general green marketing is a much broader concept, that can be
applied to consumer goods, industrial goods and even services.
Thus green marketing incorporates a broad range of activities, including
product modification, changes to the production process, packaging changes,
as well as modifying advertising. The American Marketing Association (AMA)
held the first workshop on ‘Ecological Marketing’ in 1975. The proceeding of
this workshop resulted in one of the first books on green marketing entitled
“Ecological Marketing”.
At this workshop ecological marketing was defined as the study of the
positive and negative aspects of activities on pollution, energy depletion and
non-energy depletion.
This definition has three key components :-
i) It is a subset of the overall marketing activity.
ii) It examines both positive and negative activities.
iii) A narrow range of environmental issues are examined.
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Exporting :–
Exporting is the most traditional and well established form of operating in
foreign markets. Exporting can be defined as the marketing of goods produced
in one country into another. Whils no direct manufacturing is required in an
overseas country, significant investments in marketing are required. The
tendency may be not to obtain as much detailed marketing information as
compared to manufacturing in marketing country; however, this does not
negate the need for a detailed marketing strategy.
The advantages of exporting are :–
Ø
Manufacturing is home based thus, it is less risky than overseas based
Ø
Gives an opportunity to “learn” overseas markets before investing in
bricks and mortar
Ø
Reduces the potential risks of operating overseas.
The disadvantage is mainly that one can be at the “mercy” of overseas
agents and so the lack of control has to be weighed against the advantages. For
example, in the exporting of African horticultural products, the agents and
Dutch flower auctions are in a position to dictate to producers.
Foreign production :–
Besides exporting, other market entry strategies include licensing, joint
ventures, , ownership and participation in export processing zones or free trade
zones.
Licensing :– Licensing is defined as “the method of foreign operation whereby a
firm in one country agrees to permit a company in another country to use the
manufacturing, processing, trademark, know-how or some other skill provided
by the licensor”.
It is quite similar to the “franchise” operation. Coca Cola is an excellent
example of licensing. In Zimbabwe, United Bottlers have the licence to make
Coke.
Licensing involves little expense and involvement. The only cost is signing
the agreement and policing its implementation.
Licensing gives the following advantages :–
Ø
Good way to start in foreign operations and open the door to low risk
manufacturing relationships.
Ø
Linkage of parent and receiving partner interests means both get most out
of marketing effort
Ø
Capital not tied up in foreign operation and
Ø
Options to buy into partner exist or provision to take royalties in stock.
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